Business Weekly - Cambridge, UK

Investment in the cluster is outstripping the rest of the UK and Europe – and more Cambridge technology companies than ever are profitable.

The Library House report, ‘Flight to Quality’ – produced in association with Grant Thornton – shows that Cambridge innovation companies as a cluster have attracted more investment than any other technology centre in the UK and Europe over the last 18 months.

The Cambridge Cluster report explodes the myth that Cambridge brain doesn’t always lead to Cambridge gain. Most innovation companies in the cluster are profitable – both IT and Life Sciences companies. The report shows that:-

• Cambridge cluster companies secured more than 25 per cent of the UK’s venture capital investments and more than 8 per cent of the European total by value in the first half of 2004

• Average investment levels by round are between 57 per cent and 100 per cent higher in the Cambridge cluster than in the rest of the UK and Europe

• Up to September 2004, funding in cluster companies is already close to the funding level for the whole of 2003. The cluster attracted £150 million of inward investment in 2003 and the forecast total amount of funding to be raised in 2004 is £200m

• In 2003, revenues generated by companies in the cluster amounted to £4.6 billion – a year-on-year increase of more than 13 per cent

Doug Richard, chairman of Library House said that no technology cluster, not even Silicon Valley, had ever been researched in such detail. Previous reports on the Cambridge cluster had been based on statistical extrapolation or anecdotes and speculation.

Richard said: “There has been a lot of anecdotal evidence that funding levels and investment have seen significant recovery this year. However, as the only study that actually evidences hard facts and figures on the rebound in investment through solid research, we are excited to confirm that funding levels are indeed back to those similar to 1999.”

‘Flight to Quality’ also confirms that overall the Cambridge cluster has rebounded from the downturn in investment earlier and more strongly than the UK in general and the rest of Europe.

Whereas investment levels remained constant in the Cambridge cluster (with the exception of a dip in 2003), total European investment fell by almost 80 per cent over the last four years.

Library House director Charles Cotton says investor confidence in Cambridge cluster companies has been underpinned by a number of strong exits, totalling more than $500 million in the first eight months of 2004 and by the return of the IPO, including Amino Communications and Cambridge Silicon Radio.

Cotton said: “The thrust of our findings has also been confirmed by the recent flurry of acquisitions and takeover bids, principally from America, for Cambridge cluster businesses such as Meridica, Alphamosaic and Linx Printing. Solexa’s recent fund raising in the Life Sciences sector also demonstrated how Cambridge has become something of a magnet for attracting international interest and investment.

“We believe the Cambridge cluster weathered the storm which followed the dotcom crash exceptionally well and that its future prospects are extremely bright.”

• A special Business Weekly supplement based on the report prints on Monday October 18 and will also be published as a downloadable PDF online.

For a copy of the full report – Flight to Quality – The Cambridge Cluster Report 2004 – call Library House on +44 (0) 1223 500 550. Also see www.libraryhouse.net